Over 43% of India's total consumer expenditure, amounting to ₹72.28 lakh crore ($860 billion), is driven by Gen Z, which makes up only 26% of the population, as per a report by Boston Consulting Group and Snap Inc.
The report forecasts that by 2025, every second Gen Z individual will earn, contributing to an overall consumer spending of $2 trillion (₹168 lakh crore) and influencing every second rupee spent in India.
The report, titled "The $2 Trillion Opportunity: How Gen Z is Shaping the New India", highlights that only 23% of Gen Z's current collective spending consists of direct purchases made by working individuals using their earnings. The remaining spending is categorised as 'influenced spending,' which includes purchases made by families where dependent Gen Zers merely influence product and brand choices.
The report reveals that with nearly 38 crore individuals aged 12-27, Gen Z is a diverse and influential group emerging as a key economic driver, making them a crucial focus for businesses and marketers. The findings are based on a survey conducted with around 1,000 parents to assess the extent of Gen Z's influence, and insights from 1,200 Gen Zers and millennials to explore their values and purchasing behaviours.
Despite recognizing Gen Z's potential, most businesses have been slow to act. The report indicates that while 45% of brands acknowledge the importance of this generation, only 15% have taken active steps to engage with them.
"We noticed that only 15% of brands we spoke to are actively taking steps to tap into this opportunity. For businesses, understanding and authentically engaging with GenZ isn't just good to have; it's necessary for winning today and will be imperative for survival tomorrow,” said Nimisha Jain, Senior Partner and Managing Director at BCG India.
According to the report, Gen Z is driving substantial spending across key categories, particularly in fashion, dining, and entertainment. They account for 50% of total expenditure on footwear, 48% on dining, 48% on out-of-home entertainment, and 47% on fashion and lifestyle. This highlights Gen Z’s growing influence across industries that cater to their lifestyle preferences.
With spending habits heavily influenced by social media, nearly 72% of Gen Z rely on online creators for shopping inspiration. The report reveals that while shopping in-store, one in two Gen Z shoppers are likely to check wish lists or creator pages online, significantly surpassing the 32% of millennials who do the same.
"They’re (Gen Z) all about “shopcialising” — sharing shopping experiences with their inner circle via photos or video calls. This “phygital” blend of online and offline shopping is so seamless that one out of two Gen Z is likely on the phone checking wish lists or creator pages online while in-store," the report stated.
Further, Gen Z are 1.5 times more likely to research their purchases and 1.7 times more inclined to prioritise trending styles over brand loyalty than millennials.
Underscoring the need for brands to create immersive content both online and offline, the report notes that nearly 80% of this cohort uses images, GIFs, and immersive visuals to express themselves and connect with friends.
